Unitek Solvent Services, Inc. v. Chrysler Group LLC
Filing
160
ORDER DENYING PLAINTIFF UNITEK SOLVENT SERVICES, INC.'S MOTION FOR PRELIMINARY INJUNCTION 19 Motion for Preliminary Injunction. Signed by JUDGE DERRICK K. WATSON on 09/30/2013. (eps )CERTIFICATE OF SERVICEPar ticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
FILED IN THE
UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII
3:57 pm, Sep 30, 2013
SUE BEITIA, CLERK
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI`I
UNITEK SOLVENT SERVICES,
INC., a Hawai‘i Corporation,
Plaintiff/CounterclaimDefendant,
CIVIL NO. 12-00704 DKW-RLP
ORDER DENYING PLAINTIFF
UNITEK SOLVENT SERVICES,
INC.’S MOTION FOR
PRELIMINARY INJUNCTION
vs.
CHRYSLER GROUP LLC, a Delaware
Limited Liability Company,
Defendant/CounterclaimPlaintiff.
ORDER DENYING PLAINTIFF UNITEK SOLVENT SERVICES, INC.’S
MOTION FOR PRELIMINARY INJUNCTION
INTRODUCTION
Before the Court is Plaintiff Unitek Solvent Services, Inc.’s (“Unitek”)
Motion for Preliminary Injunction (the “Motion”). Unitek seeks a preliminary
injunction preventing Defendant Chrysler Group LLC (“Chrysler”) from infringing
on its mark ECODIESEL. The Court held a two-day evidentiary hearing on the
Motion on June 25 and June 26, 2013. After careful consideration of the supporting
and opposing memoranda, the documentary and testimonial evidence, the arguments
of counsel, and the relevant legal authority, the Motion is DENIED.
BACKGROUND
This dispute arises out of Chrysler’s use of a specific EcoDiesel design
mark for an upcoming line of Chrysler vehicles with diesel engines. Since 2006,
Unitek has had the term “ECODIESEL” registered on the Supplemental Register of
the United States Patent and Trademark Office (“USPTO”) as a name for the
recycled fuel that it produces.
A.
Unitek and ECODIESEL Fuel
Unitek is a “Hawai‘i based-corporation focused on the recycling,
reclamation and re-use industry.” Direct Testimony Decl. of Blane Yamagata
(“Yamagata Direct Decl.”) ¶ 1. It has been in the business of collecting used oil
since 1975. Motion for Preliminary Injunction Decl. of Blane Yamagata
(“Yamagata PI Decl.”), Ex. 2 (Unitek’s 2004 Business Proposal to Central Pacific
Bank). Prior to and around 2004, Blane Yamagata, Unitek’s President, began
looking into ways to convert used oil into reusable fuel. In 2004, as part of a
business plan to grow its business in collecting used oil from the automotive and
machinery servicing industries and to re-refine the oil into a usable fuel, Unitek
acquired the PDX system. The PDX system consists of a “highly specialized waste
2
oil refining equipment [used] to manufacture diesel fuel from used motor oil.”
Yamagata Direct Decl. ¶ 2. Under Unitek’s business plan, the PDX proprietary
system allowed Unitek to process the used oil it was collecting “into a more sellable
fuel product similar to dyed diesel or off-road diesel . . . .” Yamagata PI Decl.,
Ex. 2.
In late 2005, Mr. Yamagata decided on the term ECODIESEL as the
name Unitek would use for its PDX-processed diesel fuel. Mr. Yamagata
explained his thought process in deciding on that name as follows:
The word ECODIESEL is not a known word from the dictionary,
and to my knowledge no one else had used ECODIESEL as a
name for a fuel or for products related to or that run on fuel. I
made the name up. To me, the prefix “eco” was suggestive of
ecological or environmentally friendly solutions, because our
fuel was created from re-claimed motor oil. In addition, “eco”
was suggest[ive] of the economical nature of our product, which
we were selling for 20% less than the price of #2 diesel.
Overall, I felt that ECODIESEL was a catchy, coined term that
would suggest the “green,” environmentally-friendly, and lower
cost qualities of our fuel.
Yamagata Direct Decl. ¶¶ 10, 11.
On December 2, 2005, Unitek’s Vice-President Sally Davis filed a
trademark application to register the ECODIESEL mark with the USPTO. Decl. of
Sally Davis (“Davis Decl.”) ¶ 2. As part of the trademark application, Davis, on
behalf of Unitek, represented that “the mark is in use in commerce on or in
3
connection with all goods or services listed in the existing registration for this
specific class: Diesel fuel; Fuel for motor vehicles, namely Diesel . . . .” Davis
Decl., Ex. A (Trademark Application) at UNITEK000015 (emphasis in original).
Although Unitek initially filed for registration of the mark on the
Principal Register, Unitek eventually amended its application on September 5, 2006
to register the mark on the Supplemental Register instead. Shortly thereafter, the
USPTO approved the application and on October 31, 2006, Unitek’s ECODIESEL
mark was registered on the Supplemental Register. The Supplemental Register
entry indicates that the mark is for “diesel fuel” and “fuel for motor vehicles, namely
diesel.” Decl. of Judith Powell (“Powell Decl.”), Exs. D, E.
Since Unitek’s acquisition of the PDX system in 2004, the fuel
produced by that system has not met the specifications necessary to sell the fuel as a
substitute for #2 Diesel (i.e., typical diesel fuel for automobiles), specifically with
regard to the sulfur level in the fuel. Beginning in 2004 and continuing for several
years, Unitek had the properties of its fuel tested repeatedly in comparison to the
properties of #2 Diesel. Those test results indicated that the sulfur level in Unitek’s
fuel was too high to meet the standards of #2 Diesel. Yamagata Direct Decl.
¶¶ 2, 4, 8.
4
Unable to market its fuel in any way as a comparable fuel to #2 Diesel
for motor vehicles, Unitek sold its PDX-generated fuel to Grace Pacific, an asphalt
company that has been purchasing the ECODIESEL fuel for use in its industrial
machinery. Unitek admits that from December 2005 until May 2013, Grace Pacific
is the only customer that has actually purchased Unitek’s ECODIESEL fuel.
Yamagata PI Decl. ¶ 20.
After the filing of this lawsuit, and approximately one month prior to
the hearing on the Motion, Paul Godfrey, a consultant for Unitek, announced that
“Unitek can now implement a filtration process that reduces the sulfur content
enough to produce ECODIESEL fuel that is EPA-compliant, #2 diesel fuel, suitable
for highway use.” Yamagata Direct Decl. ¶ 28. Mr. Godfrey had been working
with Unitek for years in trying to develop a process that would make ECODIESEL
compliant with the requirements for #2 Diesel. According to Mr. Godfrey:
The testing of the ECODIESEL fuel produced by the new
process, which has been verified by Summit Environmental
Technologies, Inc., shows that the improved ECODIESEL
exceeds the EPA standards for ASTM D-975, and is cleaner,
contains fewer contaminates, and has less sulfur than the
standard #2 diesel currently sold by the major oil companies
across the nation. Once implemented, from a regulatory
standpoint Unitek should be able to market and sell its
ECODIESEL to any outlet that supplies #2 diesel for highway
vehicles.
5
Decl. of Paul Godfrey (“Godfrey Decl.”) ¶ 10. At the hearing, Mr. Godfrey
testified that his testing was based on a single test of two gallons of sample fuel sent
to him by Unitek. Consequently, the ability to produce the low-sulfur
ECODIESEL on a commercial scale was yet unproven. Mr. Godfrey also testified
that he had not yet determined what would be done with the clay-like substance that
is a by-product of the process that reduces the sulfur level in ECODIESEL.
Mr. Yamagata also testified at the hearing that he had just submitted an
application for registration of Unitek’s ECODIESEL fuel with the United States
Environmental Protection Agency (“EPA”). Months after the hearing, on
September 24, 2013, Unitek filed (without leave) a Notice of EPA Registration of
ECODIESEL for On-Road Use. Dkt. No. 158. Attached to that filing was a letter
from the EPA, dated September 19, 2013, which notified Mr. Yamagata that the
EPA had registered ECODIESEL per 40 C.F.R. § 79.13. Id. Ex. A (Sep. 19, 2013
EPA Letter). Chrysler objected to Unitek’s post-hearing submissions on
September 30, 2013. Dkt. No. 159.
B.
Chrysler and the EcoDiesel Line of Vehicles
To provide a line of more fuel-efficient vehicles, Chrysler announced
in early 2013 that it would offer its Jeep Grand Cherokee, Dodge Ram, and
ProMaster van models with optional diesel engines. As part of the marketing for
6
these new diesel-engine vehicles, Chrysler did internal research and developed the
name “EcoDiesel” to be used on specifically designed badges that would be placed
on the exterior of the vehicles, and, in some cases, on the engine cover. Decl. of
James Morrison (“Morrison Decl.”) ¶¶ 7, 12, 14; Decl. of Robert Hegbloom
(“Hegbloom Decl.”) ¶¶ 7, 9.
After coming up with the EcoDiesel name for its engines, Chrysler’s
trademark counsel, Donna Berry, conducted a search for the use of the terms “eco”
and “diesel” in federal and state trademark registers:
This report revealed extensive use of “diesel” as a generic term
to refer to diesel engines and diesel fuel and equally extensive
use of “eco” as a descriptive term to describe the characteristics
of being environmentally friendly, ecologically minded,
economical, or otherwise efficient with respect to conserving
energy and reducing carbon emissions into the environment.
Unitek’s “EcoDiesel” Supplemental Register registration was
one such use that appeared in the report. . . . This clearance
process also revealed several abandoned or cancelled
registrations and applications for “EcoDiesel,” along with
Unitek’s Supplemental Register registration. For example, the
search results indicated that Rentech, Inc. applied to register the
term for “diesel fuels and blends of diesel fuels . . .” in April
1999 (U.S. Ser. No. 75/681,034); Clean Fuels Technology, Inc.
applied to register it for “fuels, namely emulsions of diesel fuels .
. .” in August 2001 (U.S. Ser. No. 78/078,171); and an
individual, Jeff Gordon, applied to register Eco-Diesel for
“blended diesel fuel containing ecologically sound fuel
additives, biodiesel fuel, and vegetable oil for use as alternatives
to traditional diesel fuel” in August 2003 (U.S. Ser. No.
78/294,412). . . . Since trademark applications on the Principal
7
Register are published for opposition (unlike applications on the
Supplemental Register), Mr. Gordon’s Eco-Diesel trademark
application precipitated notices of opposition from Exxon Mobil
Corporation, ChevronTexaco Corporation, and BP P.L.C., each
maintaining the term “ecodiesel” is a generic name for fuel, or at
best, merely descriptive and unregistrable in the absence of
secondary meaning.
Decl. of Donna Berry (“Berry Decl.”) ¶¶ 2–4; Id., Exs. A, B. Considering the
search results revealed the existence of several past trademark applications, Chrysler
concluded that it would not seek any exclusive right to use the term “eco” or
“diesel,” but would instead apply to register, on the Principal Register, a distinctive
EcoDiesel design mark with stylized elements to use for the badges on the vehicles
with diesel engines. Chrysler submitted its trademark application to the USPTO on
June 25, 2012 for the distinctive “EcoDiesel 3.0L” mark. Berry Decl. ¶¶ 5, 6; Id.,
Ex. C.
On September 3, 2012, the USPTO issued an Office Action to Chrysler,
refusing its application to register its EcoDiesel design mark on the Principal
Register. The Office Action stated the USPTO’s conclusion that “[r]egistration of
the applied-for mark is refused because of a likelihood of confusion with the mark in
U.S. Registration No. 3166981 [(Unitek’s ECODIESEL mark on the Supplemental
Register)].” The USPTO determined that the similarity of the marks, similarity and
nature of the goods and/or services, and similarity of the trade channels of the goods
8
and/or services were the most relevant factors in reaching its decision. Specifically,
the Office Action concluded:
The term ECODIESEL is the dominant feature of [Chrysler’s]
mark. The addition of the descriptive wording 3.0L and the
carrier and design elements does not change the overall
commercial impression of the mark. Use of [Chrysler’s] mark
and [Unitek’s] mark on closely related goods is likely to result in
confusion. . . . [Chrysler’s] goods, namely, diesel engines for
land vehicles and passenger automobiles are closely related to
[Unitek’s] goods, namely, diesel fuel for motor vehicles. The
goods are complementary goods that may be used together by
the same consumer. Use of nearly identical marks in
connection with these goods is likely to result in confusion.
Decl. of Brett Foster (“Foster Decl.”), Ex. 23.
C.
Adverse Proceedings
After receiving the USPTO’s refusal to register, Chrysler initiated, on
November 21, 2012, a Petition for Cancellation of Unitek’s ECODIESEL mark on
the Supplemental Register, stating “abandonment” as the grounds for cancellation.
Foster Decl., Ex. 24. Subsequently, Unitek initiated the present action on
December 28, 2012, and concurrently sought to stay the cancellation proceeding
before the USPTO Trademark Trial and Appeal Board. On March 19, 2013, the
cancellation proceeding was suspended pending final disposition of the action
before this Court. Foster Decl., Ex. 25.
9
Unitek filed the Motion on April 1, 2013, requesting a preliminary
injunction to enjoin Chrysler from “continued and prospective infringement of
[Unitek’s] valid ECODIESEL trademark.” Motion at 2.
STANDARD OF REVIEW
A preliminary injunction is an extraordinary and drastic remedy never
awarded as of right. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24
(2008) (citation omitted). A party “seeking a preliminary injunction must establish
that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in
the absence of preliminary relief, that the balance of equities tips in his favor, and
that an injunction is in the public interest.” Id. at 20; accord Sierra Forest Legacy
v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009). “That is, ‘serious questions going to
the merits’ and a balance of hardships that tips sharply towards the plaintiff can
support issuance of a preliminary injunction, so long as the plaintiff also shows that
there is a likelihood of irreparable injury and that the injunction is in the public
interest.” Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.
2011). Winter emphasized that plaintiffs seeking preliminary relief must
demonstrate that “irreparable injury is likely in the absence of an injunction.”
555 U.S. at 22; see also Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir.
2009).
10
DISCUSSION
I.
Likelihood of Success on Trademark Infringement
To prevail on a claim for infringement of a federally registered
trademark under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), Unitek must
establish (1) that it has a federally registered mark that is valid and protectable, and
(2) Chrysler’s use of a colorable imitation in commerce, without Unitek’s consent,
in a manner that is likely to cause confusion as to the source, affiliation, connection
or association of its services. See Karl Storz Endoscopy-Am., Inc. v. Surgical
Techs., Inc., 285 F.3d 848, 853B54 (9th Cir. 2002).
A.
Valid and Protectable Mark
Unitek contends that the ECODIESEL mark is valid and protectable
because it is both inherently distinctive and because it has acquired secondary
meaning. Chrysler counters that the ECODIESEL mark is either generic or
descriptive at best, and thus is not inherently distinctive. Further, Chrysler
contends that the ECODIESEL mark has not acquired the necessary secondary
meaning to make it distinctive. The Court concludes that the ECODIESEL mark is
descriptive and has not acquired secondary meaning. Thus, Unitek has not
established that it has a valid and protectable mark.
11
It is undisputed that Unitek’s ECODIESEL mark is presently registered
on the Supplemental Register (although Chrysler has sought cancellation of that
registration with the USPTO, which cancellation proceedings is stayed pending the
resolution of this case). Registration of a mark on the Principal Register
constitutes:
prima facie evidence of the validity of the registered mark and of
the registration of the mark, of the owner’s ownership of the
mark, and of the owner’s exclusive right to use the registered
mark in commerce on or in connection with the goods or services
specified in the certificate, subject to any conditions or
limitations stated in the certificate [of registration].
15 U.S.C. § 1057(b). However, registration of a mark on the Supplemental
Register, as in this case, does not entitle a mark to this statutory presumption:
[A]pplications for and registrations on the supplemental register
shall not be subject to or receive the advantages of sections
1051(b), 1052(e), 1052(f), 1057(b), 1057(c), 1062(a), 1063 to
1068, inclusive, 1072, 1115 and 1124 of this title.
15 U.S.C. § 1094 (emphasis added). Thus, “[r]egistration on the principal register
shows that the Commissioner has determined that the mark is distinctive.
Registration on the supplemental register means that the Commissioner has
determined that the mark is ‘capable of distinguishing.’” California Cooler, Inc. v.
Loretto Winery, Ltd., 774 F.2d 1451, 1454 (9th Cir. 1985) (quoting 15 U.S.C.
§ 1091(a)).
12
Unlike Principal Registration, “Supplemental Registration creates no
substantive rights.” J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition (“McCarthy”) § 19:37. However, because marks on the Supplemental
Register are capable of being distinguished, Unitek may show that the ECODIESEL
mark is valid and protectable by demonstrating that the mark has become
sufficiently distinctive. The distinctiveness of a mark is determined by considering
the classification of the mark, which may fall into four categories: (1) generic; (2)
descriptive; (3) suggestive; and (4) arbitrary or fanciful. See Two Pesos, Inc. v.
Taco Cabana, Inc., 505 U.S. 763, 768 (1992).
The latter two of these categories are entitled to trademark protection
because “‘imagination’ or a ‘mental leap’ is required in order to reach a conclusion
as to the nature of the product being referenced.” Filipino Yellow Pages, Inc., v.
Asian Journal Publications, Inc., 198 F.3d 1143, 1147 n.3 (9th Cir. 1999). By
contrast, generic terms are never protected because they “refer[] to the type or
species of the product at issue.” Rudolph Int’l, Inc. v. Realys, Inc., 482 F.3d 1195,
1197 (9th Cir. 2007). Descriptive terms, which generally are not protected, may be
entitled to trademark protection once the mark in question has acquired “secondary
meaning” in the minds of consumers. Id. at 1197–98; see Kendall-Jackson Winery,
Ltd. V. E. & J. Gallo Winery, 150 F.3d 1042, 1047 (9th Cir. 1998) (“Descriptive
13
marks are not inherently distinctive and hence do not initially satisfy the
distinctiveness element. But descriptive marks can acquire distinctiveness if the
public comes to associate the mark with a specific source. Such acquired
distinctiveness, which is referred to as “secondary meaning,” allows § 43 to protect
descriptive marks that otherwise could not qualify for protection as trademarks.”).
A mark has acquired secondary meaning when “it has ‘become distinctive of the
[trademark] applicant’s goods in commerce.’” Filipino Yellow Pages, 198 F.3d at
1147 (quoting Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 10 (2d
Cir. 1976)).
The Court must first determine into which category the ECODIESEL
mark properly fits.
1.
The Mark is Neither Arbitrary, Fanciful, Suggestive, nor
Generic
“Arbitrary or fanciful marks deserve wide protection because the
trademark holder can properly expect to run into very little confusion from honest
competitors.” Dreamwerks Prod. Group, Inc. v. SKG Studio, 142 F.3d 1127, 1130
n.7 (9th Cir. 1998). “Arbitrary marks have no relevance to any feature or
characteristic of a product. Fanciful marks are the most distinctive marks of all;
they involve a high degree of imagination.” Kendall-Jackson Winery, 150 F.3d at
14
1047 n.8. “A fanciful mark is a coined word or phrase, such as Kodak, invented
solely to function as a trademark. An arbitrary mark, such as Dutch Boy on a can of
paint, uses common words in a fictitious and arbitrary manner to create a distinctive
mark which identifies the source of the product. In either case the trademark holder
must work hard to make consumers associate the trademark with the product.”
Dreamwerks, 142 F.3d at 1130 n.7 (internal citation omitted). None of the parties,
including Unitek, contends that the ECODIESEL mark meets the definition of an
arbitrary or fanciful mark, and the Court agrees.
Unitek argues, however, that the ECODIESEL mark is suggestive.
The Court declines to so find.
Suggestive marks “subtly connote something about the products,”
AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 349 (9th Cir. 1979), in such a way that
the consumer must “‘use imagination or any type of multistage reasoning to
understand the mark’s significance.’” Entrepreneur Media, Inc. v. Smith, 279 F.3d
1135, 1142 (9th Cir. 2002) (quoting Kendall-Jackson Winery, 150 F.3d at 1047 n.8);
see Zobmondo Entm’t, LLC v. Falls Media LLC, 602 F.3d 1108, 1115 (9th Cir.
2010) (“[T]he most-used[] test [for determining whether a mark is suggestive] is
known as the ‘imagination’ test, and asks whether ‘imagination or a mental leap is
required in order to reach a conclusion as to the nature of the product being
15
referenced.’” (quoting Rudolph Int’l, Inc., 482 F.3d at 1198)); McCarthy § 11:67
(“Under the imagination test, the question is how immediate and direct is the thought
process to go from the designation to some characteristic of the product.”).
“Examples of suggestive marks include ‘Air Care’ for a service that maintains
medical equipment used for administering oxygen and ‘Anti-Washboard’ for a soap
that makes scrubbing unnecessary when washing clothes.” Kendall-Jackson
Winery, 150 F.3d at 1047 n.8 (internal citations omitted).
The Court holds that no mental leap is required in order to conclude that
ECODIESEL is a reference to a diesel fuel product that is more ecological than
normal diesel fuel. Unitek concedes that one well-accepted meaning of “eco” is
“environmental friendliness,” and does not argue that the term “diesel” in
ECODIESEL is anything other than a generic reference to diesel fuel. Combining
the terms, no imagination is required to discern that this term references
ecologically-conscious diesel. Although Unitek contends that “eco” could have
meanings other than environmental friendliness, the test of suggestiveness is not
what could be interpreted by the mark; the question for the Court is whether a mental
leap is necessary in order to understand that mark’s relationship with the product.
See Zobmondo, 602 F.3d at 1116 (“The imagination test does not ask what
information about the product could be derived from a mark, but rather whether a
16
mental leap is required to understand the mark’s relationship to the product.”
(internal quotation marks omitted) (emphasis in original)). Under this test, not even
a mental hop is necessary to link ECODIESEL with Unitek’s fuel product.
On the other hand, Unitek is correct that its mark is not generic. “A
generic term is one that refers to the genus of which the particular product is a
species.” Park ‘N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194 (1985);
see McCarthy § 12:1 (“[T]o properly be called an unprotectable ‘generic name’ in
trademark law, the designation must be the name of the same product or service
which it is alleged to identify the source of.”). “For instance, ‘Liquid controls’ is a
generic term for equipment for dispensing and mixing liquids, and ‘Wickerware’ is a
generic term for wicker furniture and accessories, because those terms simply state
what the product is.” Kendall-Jackson Winery, 150 F.3d at 1047 n.8 (internal
citations omitted). As Chrysler itself argues, registration of the ECODIESEL mark
on the Supplemental Register is an indication that the mark is not generic.
Opposition at 16; see Express Diagnostics Int’l, Inc. v. Tydings, Civ. No. 06-01346,
2009 WL 111736, at *4 (N.D. Cal. Jan. 15, 2009) (“Given that registration on the
Supplemental Register is only available to marks that are ‘capable of distinguishing’
and that generic marks are never capable of distinguishing, the PTO has determined
that the . . . mark is descriptive and is not generic.”); McCarthy § 12:59 (“Generic
17
names are not registrable on the Supplemental Register since they are not capable of
distinguishing the applicant's goods or services.”).
2.
The Mark is Descriptive But Has Not Acquired Secondary
Meaning
A descriptive mark is the final category of marks that ECODIESEL
may fit within. “Descriptive marks define qualities or characteristics of a product
in a straightforward way that requires no exercise of the imagination to be
understood. Thus, ‘Honey Baked Ham’ is a descriptive term for a ham that has
been baked with honey, and ‘Honey Roast’ is a descriptive term for nuts that have
been roasted with honey.” Kendall-Jackson Winery, 150 F.3d at 1047 n.8 (internal
citations omitted). As discussed above, no mental leap or exercise of imagination is
necessary to understand that ECODIESEL is a mark that describes the
characteristics of Unitek’s fuel product—ecologically conscious diesel.
See Zobmondo, 602 F.3d at 1114-16. Thus, the ECODIESEL mark is descriptive.
“Although descriptive terms generally do not enjoy trademark
protection, a descriptive term can be protected provided that it has acquired
secondary meaning in the minds of consumers, i.e., it has become distinctive of the
trademark applicant’s goods in commerce.” Filipino Yellow Pages, 298 F. 3d at
1147 (internal quotation marks and brackets omitted). Chrysler contends that
18
Unitek has failed to establish that the mark has acquired the requisite secondary
meaning. The Court agrees.
“Secondary meaning can be established in many ways, including (but
not limited to) direct consumer testimony; survey evidence; exclusivity, manner,
and length of use of a mark; amount and manner of advertising; amount of sales and
number of customers; established place in the market; and proof of intentional
copying by the defendant.” Id. at 1151.
Unitek first points to the fact that it sells all of the ECODIESEL fuel
that it produces. Yamagata PI Decl. ¶ 9. However, this uncontroverted evidence
actually hurts Plaintiff’s case more than it helps because it is undisputed that Unitek
sells all of its ECODIESEL fuel to a single customer, Grace Pacific. This evidence
weighs against a determination of secondary meaning because it illustrates the very
limited number of customers who have actually ever purchased Unitek’s fuel
product and who may have come to associate ECODIESEL with Unitek. See, e.g.,
Wembley, Inc. v. Diplomat Tie Co., 216 F. Supp. 565, 583 (D. Md. 1963) (“The fact
that one buyer out of all of those questioned apparently connected the [mark] with
[the mark’s owner] does not establish distinctiveness or secondary meaning. Proof
of distinctiveness requires more than proof of the existence of one person or of even
a relatively small number of people who associate the [mark] with [the mark’s
19
owner].”); In re Paint Prods. Co., 8 U.S.P.Q.2d 1863, 1866 (T.T.A.B. 1988)
(“Because these affidavits were sought and collected by applicant from ten
customers who have dealt with applicant for many years, the evidence is not
altogether persuasive on the issue of how the average customer for paints perceives
the [mark].”). Although Grace Pacific may associate ECODIESEL with Unitek,
this is insufficient to establish that a significant segment of the relevant public would
make the same association.1
Next, Unitek points to the advertising it has done via displays at
national trade shows and other promotional materials. Yamagata PI Decl. ¶¶ 1, 13–
15, 21–23. However, Unitek has not provided any evidence from an impartial
source to establish how the mark has acquired secondary meaning to a substantial
segment of the public through Unitek’s advertising and marketing. Instead, Mr.
Yamagata provided the only testimony on the impact of Unitek’s advertising and
marketing of ECODIESEL. This is problematic given that “‘[e]vidence of
secondary meaning from a partial source possesses very limited probative value.’”
1
Even for Grace Pacific, there is inconsistent evidence as to the association between the
ECODIESEL mark and Unitek’s fuel product. At the hearing, three representatives of Grace
Pacific testified that they were familiar with the term ECODIESEL and its use by Unitek.
However, the evidence also indicates that the fuel supply agreement with Grace Pacific (which
was drafted by Unitek) refers to Unitek’s fuel product as “Unitek Diesel Fuel.” Chrysler’s
Ex. 138 (Nov. 1, 2005 Fuel Supply Agreement). Further, Grace Pacific, in its own permitting
applications, referred to Unitek’s fuel product as “Unitek Diesel.” Chrsyler’s Exs. 142, 149, 156.
20
Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 654 F.3d 958, 967 (9th Cir. 2011)
(quoting Filipino Yellow Pages, 198 F.3d at 1152). Specifically, testimony from a
company officer about secondary meaning acquired from trade shows and other
marketing has little or no probative value if it is otherwise uncorroborated. Id.
The fact that Unitek made promotional DVDs and displays, and was covered in a
single local television news story, does not do enough to show that the ECODIESEL
mark has acquired secondary meaning in the minds of consumers.
Moreover, these advertisement and promotional efforts were limited
and dated. Mr. Yamagata represented that he advertised Unitek’s fuel product
throughout Hawai‘i in 2005; that he promoted Unitek at a conference in 2005 and
another in 2006; and that a local news station covered the opening of Unitek’s plant
in 2006. Yamagata Direct Decl. ¶¶ 13, 15, 16–17. Since 2006, the only
promotional efforts that Mr. Yamagata points to are responses to unidentified
“potential customers” that inquire as to Unitek’s fuel product, and to which Unitek
responds by sending a brochure and a promotional DVD. Id. ¶ 23.
The Court notes that up until the time of Chrysler’s alleged infringing
acts and the initiation of this lawsuit, Unitek never advertised ECODIESEL as a
diesel fuel product for motor vehicles or sold ECODIESEL to anyone for use in
motor vehicles. See, e.g., Yamagata PI Decl., Ex. 7 (stating that ECODIESEL is
21
not used in motor vehicles because of the high sulfur content). Thus, any secondary
meaning that could have been acquired would not have associated ECODIESEL as a
motor vehicle fuel with Unitek. Any evidence related to more recent advertisement
efforts by Unitek to market ECODIESEL as a motor vehicle fuel, evidence of Unitek
now exploring contracts to sell fuel for use in vehicles, or evidence of EPA
registration of ECODIESEL is irrelevant to the determination of secondary
meaning. Unitek must establish that its mark acquired secondary meaning at the
time and place that Chrysler began use of the mark. McCarthy § 15:4; Commerce
Nat’l Ins. Servs., Inc. v. Commerce Ins. Agency, Inc., 214 F.3d 432, 438 (3d Cir.
2000).
Unitek has also not provided any survey evidence to support its
argument for secondary meaning. Although survey evidence is not required to
prove secondary meaning, “‘[a]n expert survey of purchasers can provide the most
persuasive evidence of secondary meaning.’” Comm. For Idaho’s High Desert,
Inc. v. Yost, 92 F.3d 814, 822 (9th Cir. 1996) (quoting Vision Sports, Inc. v. Melville
Corp., 888 F.2d 609, 615 (9th Cir.1989)).
Consequently, the Court concludes that Unitek has not shown a
likelihood of success in establishing that ECODIESEL, as a descriptive mark, has
acquired the necessary secondary meaning to entitle it to trademark protection.
22
Unitek’s claim to a preliminary injunction fails for this reason alone, but the Court
will also address the likelihood of confusion element, which similarly does not
establish Unitek’s likelihood of success on the merits of its trademark infringement
claim.
B.
Likelihood of Confusion
Even if Unitek could establish that its mark was valid and protectable,
the Court concludes that there is also no likelihood of confusion. The Court
concludes that the USPTO’s determination that there was a likelihood of confusion
between the marks is entitled to no preclusive effect. This is particularly so given
the fact that the USPTO was proceeding under the assumption that the marks were
being used for “closely related goods . . . namely, diesel engines for land vehicles
and . . . diesel fuel for motor vehicles.” Foster Decl., Ex. 23. The USPTO made
this assumption because Unitek represented under oath, at the time of its application,
that the ECODIESEL mark was in present use in commerce for fuel for motor
vehicles, when in fact it was not. Davis Decl., Ex. A (Trademark Application) at
UNITEK000015.
Unitek has the burden to demonstrate a likelihood of confusion. See
KP Permanent MakeBUp, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 112
(2004) (“Section 1115(b) places a burden of proving likelihood of confusion (that is,
23
infringement) on the party charging infringement even when relying on an
incontestable registration.”).
The Ninth Circuit has set forth the following standard for
demonstrating a likelihood of confusion:
To determine whether there is a likelihood of confusion between
the parties’ allegedly related goods and services, we consider the
following eight [AMF Inc. v. Sleekcraft Boats, 599 F.2d 341,
348B49 (9th Cir. 1979) (“Sleekcraft”)] factors: (1) strength of the
mark; (2) proximity of the goods; (3) similarity of the marks; (4)
evidence of actual confusion; (5) marketing channels used; (6)
type of goods and the degree of care likely to be exercised by the
purchaser; (7) defendant’s intent in selecting the mark; and (8)
likelihood of expansion of the product lines.
M2 Software, Inc. v. Madacy Entm’t, 421 F.3d 1073, 1080 (9th Cir. 2005) (citation
omitted). “The test is a fluid one and the plaintiff need not satisfy every factor,
provided that strong showings are made with respect to some of them.” Surfvivor
Media, Inc. v. Survivor Prods., 406 F.3d 625, 631 (9th Cir. 2005). In essence,
“[t]he test for likelihood of confusion is whether a ‘reasonably prudent consumer’ in
the marketplace is likely to be confused as to the origin of the good or service
bearing one of the marks.” Dreamwerks Prod. Group, Inc. v. SKG Studio, 142 F.3d
1127, 1129 (9th Cir. 1998).
24
1.
Strength of the Mark
As to the strength of the mark, Unitek repeats its arguments discussed
above as to the inherently distinctive nature of the ECODIESEL mark and the
secondary meaning that the mark has acquired. However, as discussed above, the
ECODIESEL mark is not inherently distinctive and it has not acquired secondary
meaning.
“The stronger a mark—meaning the more likely it is to be remembered
and associated in the public mind with the mark’s owner—the greater the protection
it is accorded by the trademark laws.” Brookfield Commc’ns v. W. Coast Entm=t
Corp., 174 F.3d 1036, 1058 (9th Cir. 1999). The Court considers both the
conceptual strength and the commercial strength of a mark. See GoTo.com, Inc. v.
Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000). As with distinctiveness,
“[c]onceptual strength involves classification of a mark ‘along a spectrum of
generally increasing inherent distinctiveness as generic, descriptive, suggestive,
arbitrary, or fanciful.’” Network Automation, 638 F.3d at 1149 (quoting
Brookfield, 174 F.3d at 1058). “The strength of a mark is determined by its
placement on a continuum of marks from generic, afforded no protection; through
descriptive or suggestive, given moderate protection; to arbitrary or fanciful
awarded maximum protection.” E. & J. Gallo Winery v. Gallo Cattle, 967 F.2d at
25
1291 (9th Cir. 1992) (citation and quotation marks omitted). As already
determined above, the ECODIESEL mark is merely descriptive of the product (i.e.,
diesel fuel that is more environmentally friendly than regular #2 diesel). Further,
the ECODIESEL mark has not acquired the requisite secondary meaning through
commercial use. On balance, this factor therefore weighs against a finding of a
likelihood of confusion.
2.
Proximity of the Goods
Unitek contends that its ECODIESEL fuel is complementary to
Chrysler’s EcoDiesel engines.
Related goods are generally more likely than unrelated goods to
confuse the public as to the producers of the goods. The danger
presented is that the public will mistakenly assume there is an
association between the producers of the related goods, though no such
association exists. The proximity of goods is measured by whether the
products are: (1) complementary; (2) sold to the same class of
purchasers; and (3) similar in use and function.
Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1150 (9th
Cir. 2011) (internal citations, quotation marks, and brackets omitted).
As discussed above, Unitek has never sold its fuel product as a fuel
for motor vehicles. Moreover, even if it were to do so in the future (as it is
contending that it will), any proximity of goods is negated by the high degree of care
26
that consumers would be expected to exercise in the purchase of Chrysler’s motor
vehicles:
The relevant cases not only authorize but instruct the trial courts,
in making a determination as to likelihood of confusion, to
consider the level of sophistication of the relevant purchasers
. . . . The greater the value of an article the more careful the
typical consumer can be expected to be; the average purchaser of
an automobile will no doubt devote more attention to examining
different products than will the average purchaser of a ball of
twine . . . .
McCarthy § 23:96 (quoting McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126,
1137 (2d Cir. 1979); see Network Automation, 638 F.3d at 1150 (holding that
proximity of goods is unimportant where “consumers exercise a high degree of care,
because rather than being misled, the consumer would merely be confronted with
choices among similar products.”).
Thus, this factor is either neutral or weighs against Unitek.
3.
Similarity of the Marks
Unitek argues that Chrysler’s stylized EcoDiesel mark is exactly the
same as Unitek’s ECODIESEL mark. Although the two marks share the same
“ecodiesel” text, the marks are readily distinguishable by the stylized characteristics
unique to Chrysler’s mark.
27
“[T]he greater the similarity between the two marks at issue, the greater
the likelihood of confusion.” GoTo.com, 202 F.3d at 1206. Several axioms guide
the similarity analysis: (1) “the marks must be considered in their entirety and as
they appear in the marketplace;” (2) “similarity is adjudged in terms of appearance,
sound, and meaning;” and (3) “similarities are weighed more heavily than
differences.” Id. (citations omitted).
In considering the marks in their entirety, the similarity lies in the word
“ecodiesel” itself. However, examining the evidence of the many variations of
“eco” and “diesel” used by many entities, see, e.g., Decl. of Louie Crumbley
(“Crumbley Decl.”), Exs. C, E, F, G, coupled with the Court’s conclusion here that
the ECODIESEL mark is descriptive and has not acquired secondary meaning,
Unitek cannot claim to have exclusive use of all forms of the word “ecodiesel.” See
SunEarth, Inc. v. Sun Earth Solar Power Co., Ltd., 846 F. Supp. 2d 1063, 1078
(N.D. Cal. 2012) (Observing that, in cases “where that shared word is a common one
in the industry, the plaintiff is not permitted to claim right to all variants on it.”).
28
Other than the use of the same word, the marks are quite different visually, with
Chrysler’s marks having a unique, stylized2 design:
Unitek’s mark, on the other hand, is simply the word “ecodiesel” with no stylized
items such as a unique font, color, or any other visual characteristic:
Thus, although the two marks may share the same sound, “they are visually
distinguishable as typically used by the parties in print.” Playmakers LLC v. ESPN,
Inc., 376 F.3d 894, 897 n.1 (9th Cir. 2004). Further, although the same word
“ecodiesel” is used in both marks, the meanings are different; one refers to a fuel
while the other refers to a vehicle engine.
2
At the hearing, Chrysler presented a demonstrative exhibit of the actual badge to be placed on the
Jeep Grand Cherokee. It is similar to the design of the mark included in this Order, with the
addition of color: the leaf symbol and the word “Diesel” are in green.
29
At best for Unitek, the Court concludes that this factor is neutral
because of the shared use of the word “ecodiesel.” See Surfvivor Media, Inc., 406
F.3d at 633.
4.
Chrysler’s Intent in Selecting the Mark
Unitek argues that Chrysler intended to infringe on Unitek’s
ECODIESEL mark. Chrysler does not dispute that it became aware of Unitek’s
Supplemental Registration when Chrysler was in the process of researching the
ability to use the EcoDiesel mark. Berry Decl. ¶ 3. However, Chrysler contends
that it had no malicious intent in deciding to use the EcoDiesel mark because its
research did not indicate that Unitek was using the mark in a way that would conflict
with Chrysler’s use, and because Chrysler determined that prior USPTO
proceedings evidenced that it was unlikely that anyone could use the term
“ecodiesel” exclusively in all variations.
The Court finds that this factor is neutral. Chrysler’s undisputed
knowledge of the existence of Unitek’s mark weighs against Chrysler. Even if
Chrysler had no malicious intent, the “[a]bsence of malice is no defense to
trademark infringement.” Surfvivor Media, Inc., 406 F.3d at 634 (quoting Cohn v.
Petsmart, Inc., 281 F.3d 837, 843 (9th Cir. 2002)). That said, Chrysler conducted
thorough research into the use of the term “ecodiesel,” which research uncovered
30
several instances of its use with slight variations. Berry Decl., Ex. A. Further,
Chrysler discovered that in 2004 (prior to Unitek’s registration on the Supplemental
Register), the USPTO determined (in an application for the Principal Register made
by an individual unaffiliated with anyone in this litigation) that:
The term ECO-DIESEL is merely descriptive of the applicant’s
goods, namely, diesel fuel containing ecologically sound
additives and known in the industry as ECO-DIESEL fuel. The
mark immediately names the exact nature of the goods and does
nothing else. Accordingly, the mark is refused registration on
the Principal Register under Section 2(e)(1).
Chrysler’s Ex. 134 at Unitek 001556. The Court therefore concludes that the extent
of Chrysler’s research, and the indication from the USPTO that a term similar to
“ecodiesel” could not be registered for exclusive use on the Principal Register,
collectively negates, from an intent perspective, the fact that Chrysler knew of the
existence of Unitek’s mark on the Supplemental Register. Thus, at best for Unitek,
this factor is neutral.
5.
Likelihood of Expansion of the Product Lines
Finally, Unitek contends that there is a likelihood of confusion because
of the possibility that Unitek may soon place its ECODIESEL fuel in the market for
motor vehicle fuels. As noted above, there is little evidence that prior to Chrysler’s
initial use of its mark, Unitek could even market its ECODIESEL (either in the
31
present or the future) as a fuel for motor vehicles. More recently, Unitek proffered
statements from Mr. Godfrey that Unitek may be able to adapt its refining process in
order to produce fuel that could be sold for motor vehicles. Godfrey Decl., Ex. B.
Unitek has also purportedly registered ECODIESEL (the sulfur-reduced version)
with the EPA. Dkt. No. 158, Ex. A.
At this juncture, however, the Court is not convinced that Unitek will
be able to produce its fuel on a commercial scale for motor vehicles. Unitek admits
that no plan has yet been developed on how to manage the significant waste
by-products that will be generated by the new sulfur-reducing process. Unitek also
presented no specific evidence of how it intends to scale its production process for a
consumer market. Thus, Unitek has not shown a sufficiently strong likelihood of
expansion. See M2 Software, Inc., 421 F.3d at 1085 (“[T]here is a need for a strong
possibility of expansion into competing markets for this factor to weigh in favor of a
finding of infringement.” (brackets and quotation marks omitted) (emphasis in
original)). Regardless, the Court also notes that even if Unitek began selling its
ECODIESEL as motor vehicle fuel, Chrysler is not in the market of motor vehicle
fuel production and has no plans to enter that market. The Court is not convinced
that a motor vehicle engine and a (potential) motor vehicle fuel are products in
significantly similar markets such that confusion is likely to result, particularly
32
given the high degree of care inherent in the purchase of motor vehicles.
Accordingly, this factor weighs against Unitek.
In sum, the Court concludes that the weight of the preliminary evidence
as a whole demonstrates that the reasonably prudent consumer is not likely to be
confused as to goods bearing either Unitek’s or Chrysler’s marks.3
C.
Use of Unitek’s ECODIESEL Mark in Commerce
Chrysler additionally opposes the Motion by contending that, as a
threshold matter, Unitek is not entitled to Lanham Act protection for its
ECODIESEL mark because Unitek has not used the mark in commerce. Unitek
counters that its limited sales of ECODIESEL are sufficient to satisfy the “use in
commerce” requirement. Given the Court’s conclusion that Unitek is not likely to
succeed on the merits for the reasons discussed above, the Court does not reach a
determination, for purposes of this Motion, of whether Unitek’s ECODIESEL mark
has been used in commerce. That issue may be addressed further by Chrysler in
any later motion it may make to the Court. The Court notes, however, that it is
questionable whether Unitek used the ECODIESEL mark in commerce prior to
January 2013, when this action commenced, particularly as to whether the mark was
3
Unitek does not address directly the remaining three Sleekcraft factors—evidence of actual
confusion; marketing channels used; and type of goods and the degree of care likely to be
exercised by the purchaser—in arguing for a likelihood of confusion.
33
used in commerce for motor vehicle fuel. See Chance v. Pac-Tel Teletrac Inc., 242
F.3d 1151, 1157 (9th Cir. 2001) ( “The Federal Circuit has held that ‘use in
commerce,’ in the context of a trademark, means ‘a bona fide sale or transportation
in commerce which may lawfully be regulated by Congress. . . . This requirement
breaks down into two distinct elements: (1) Was the transaction upon which the
registration application was founded bona fide; and (2) if it was bona fide, was it
followed by activities proving a continuous effort or intent to use the mark.’”
(quoting Avakoff v. S. Pac. Co., 765 F.2d 1097, 1098 (Fed. Cir. 1985))).
II.
Irreparable Harm
Unitek must demonstrate that irreparable harm is likely, not just
possible. Winter, 555 U.S. at 22. Courts do not presume irreparable harm in
intellectual property cases, nor would Unitek be entitled to such a presumption here
because it has not demonstrated a likelihood of success on the merits. See eBay Inc.
v. MercExchange, LLC, 547 U.S. 388, 392-93 (2006) (rejecting invitation to replace
traditional equitable considerations with a rule that an injunction automatically
follows a determination that a copyright has been infringed); Flexible Lifeline Sys.,
Inc. v. Precision Lift, Inc., 654 F.3d 989, 998 (9th Cir. 2011) (“[E]ven in a copyright
infringement case, the plaintiff must demonstrate a likelihood of irreparable harm as
a prerequisite for injunctive relief, whether preliminary or permanent.”); AFL
34
Telecommunications LLC v. SurplusEQ.com, Inc., 2011 WL 4102214, at *3 (D.
Ariz. Sept. 14, 2011) (“Irreparable harm is no longer presumed in a trademark or
copyright case upon a showing of a likelihood of success on the merits.”).4
Although injury to goodwill and business reputation, as alleged by
Unitek, are generally considered to be intangible and, as a result, irreparable, cf.
MySpace, Inc. v. Wallace, 498 F. Supp. 2d 1293, 1305 (C.D. Cal. 2007) (“Harm to
business goodwill and reputation is unquantifiable and considered irreparable.”),
with OG International, Ltd. v. Ubisoft Entertainment, 2011 WL 5079552, at *10
(N.D. Cal. Oct. 26, 2011) (“The fact that alleged harm is primarily in the form of lost
customers and business goodwill, which at least in theory may be compensated by
damages, weighs against a claim of irreparable harm.” (citation and quotation marks
omitted)), the evidence offered in support of such injury has thus far been scant and
speculative, and therefore insufficient to carry Unitek’s burden of demonstrating
real and imminent irreparable harm. Moreover, Unitek’s arguments for irreparable
4
While the Ninth Circuit has not yet directly addressed the effect of Winter upon the presumption
of irreparable harm in the trademark infringement context, it has found that the analogous
presumption in the copyright infringement context has effectively been overturned in light of
Winter and eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). See Flexible Lifeline Sys.,
Inc. v. Precision Lift, Inc., 654 F.3d 989, 999-1000 (9th Cir. 2011); Perfect 10, Inc. v. Google, Inc.,
653 F.3d 976, 978–981 (9th Cir. 2011). District courts in this Circuit that have addressed this
issue have found that the governing law has changed, and a movant is not granted the presumption
of irreparable harm upon a showing of likelihood of success on the merits of a trademark
35
harm are based entirely on a determination of market confusion, which Unitek has
failed to establish, as discussed above.
III.
Other Factors
The Court further finds that Unitek has not demonstrated that the
balance of hardships tips in its favor or that an injunction is in the public interest.
CONCLUSION
Plaintiff Unitek Solvent Services, Inc.’s Motion for Preliminary
Injunction is hereby DENIED.
IT IS SO ORDERED.
DATED: HONOLULU, HAWAI‘I, September 30, 2013.
Derrick K. Watson
United States District Judge
Unitek Solvent Services, Inc. v. Chrysler Group LLC; CV 12-00704 DKW/RLP;
ORDER DENYING PLAINTIFF UNITEK SOLVENT SERVICES, INC.’S
MOTION FOR PRELIMINARY INJUNCTION
infringement claim. See BoomerangIt, Inc. v. ID Armor, Inc., 2012 WL 2368466, at *4 (N.D.
Cal. June 21, 2012) (citing cases).
36
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